|By Alex Volpi, Technology Advisory Practice Leader|
At some point, companies will reach a point where spreadsheets, disparate systems and disjointed processes are no longer cutting it. This is where Enterprise Resource Planning (ERP) systems come into the picture for many organizations.
In fact, 96% of emerging businesses that are leaders in their industries use an ERP system, and 95% of companies saw an improvement in their business processes after implementing an ERP system, according to Aberdeen Group.
What is ERP?
The simplest way to define ERP is as a system that integrates all the core processes involved in running a company: finance, procurement, inventory management, manufacturing, supply chain, human resources, and sales, among others.
At its most basic level, ERP joins all these processes into a single software application. All your core company information is compiled into a central database, which acts as a single source of truth. It is at this point where decision makers can use the collated information to gain cross-departmental visibility, allowing for the discovery of process improvements. These typically lead to efficiency gains, which in turn lead to savings of money, time, or both.
5 Main Benefits of ERP
Here are some of the main benefits of implementing an ERP system to your business.
1. Business Process Improvements
As ERP vendors upgrade and enhance their systems, they consider feedback from their current user base and leverage industry best practices. ERP vendors want to build software functionality with the business process in mind. A company’s technology footprint should support the industry they compete in, and not undermine it. ERP systems support best practice process execution across all functional areas within the business. This leads to higher levels of data integrity and speed.
2. Increased Visibility and Accuracy
ERP systems allow for businesses to rely on one database and one system to drive the core operations of the company. Being able to monitor inventory levels by SKU, and notify procurement when they need to purchase more raw materials to fulfill an outstanding sales order, or reducing the time it takes to complete the month end close because the transactional data is clean, are just some examples of how ERP provides users with the information they need to make key business decisions.
3. Focused IT Costs
An ERP system can unify your IT costs, which can (more than) make up for the cost of investing in the new system. Since ERP is a single application that supports the core operating model of your company, you’ll no longer need to educate employees on how to use various disparate systems that support discrete business processes.
Removing technology clutter improves efficiency and data integrity throughout the entire organization. Businesses typically find they can retire software applications that provide duplicative functionality with the new ERP. These organizations are then able to reallocate that investment into other departments or initiatives.
4. Successful User Adoption
As with any new system, the ERP will require training current and new employees to make the most of it. However, this is far more straightforward than training employees on multiple software applications to execute day-to-day functions.
Instead, you can train everyone in the organization on one system for all main functions, which expedites your potential return on investment for the ERP. Once trained on how to use the system efficiently, users can easily collaborate across functional areas to make informed and educated decisions.
5. Built to Scale
ERP vendors typically offer add-on modules that can be “turned-on” as new business requirements become apparent. You no longer need to search the market to identify another software provider to handle the new requirement. Instead, your current ERP provider may already have an additional module that can be licensed, or supply a pre-built integration to a popular ancillary application.
The benefit of adding modules onto your existing ERP is that this new module will have the same or similar user interface – a familiar look and feel – to assist your employees in getting comfortable with any new add-on quickly. This makes training, change management, and the overall adoption more successful.